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Chinese-led group bids for German cement plant firm KHD

Oct, 14 2013

A Chinese-led consortium has offered to buy KHD Humboldt Wedag International AG in a deal valuing the German cement plant services firm at about $433 million, joining a trend of Chinese firms looking to snap up German infrastructure specialists.

State-owned Chinese aerospace and defense company AVIC International SASAGQ.UL said on Friday it would, together with Singapore-based takeover lawyer Yap Lian Seng, bid 6.45 euros a share for KHD (KWGG.DE), a premium of nearly 27 percent over the stock's closing price on Thursday.

KHD was not immediately available to comment on the bid, which values its equity at about 320 million euros ($433 million).

The Cologne-based company, formerly a unit of engine manufacturer Deutz (DEZG.DE), reported 213 million euros in revenue and earnings of 6.4 million before interest and tax for 2012. Cash on its books amounted to 283 million at the end of last year.

Through its subsidiary Max Glory Industries, AVIC already owns 20 percent of KHD, which focuses on energy-efficient processes to grind clinker into cement.

Chinese companies have scooped up a number of German groups in recent months to gain access to technology, brands and worldwide distribution, including Sany's (600031.SS) acquisition of concrete pumps maker Putzmeister last year.

According to KHD, China accounts for roughly 60 percent of the world's consumption of cement, a key ingredient of concrete, with India coming a distant second at just 6 percent.

Investment in fixed capital assets - such as new roads and bridges that require concrete - is a mainstay of China's growth, accounting for roughly half of its economic output.


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